Life insurance policies that offer dividends are often pretty flexible. This gives you, the consumer, a chance to make changes to the dividend option as it fits your needs. When you bought your policy you may have directed the insurer to use your dividends one way, and now you would like to change that. Depending on the policy you have and application process timing, it is usually pretty simple. The first obvious step you must take is to call your insurer and ask if your policy allows you to change your dividend option.

Understanding your policy is important for making informed decisions. Do not hesitate to call your agent or insurer and ask them to map out exactly how you can change your dividend option, how any changes could affect your policy, and what you need to do to make the requested changes. You need to be fully informed what the long term and short term implications of your choices are. You can request that they map out, on paper, exactly how the changes would work, how they would affect your premium or investment, and/or your death benefit.

Step Two

Once you know that your policy offers the option of changing your dividend option it will usually be as simple as a phone call to the Customer Service Department of your insurance provider. If the policy is owned by multiple people, say in a business arrangement, all owners will need to sign a provided form and return it to the insurer. Also, if you have recently changed your address, or you want the money transferred to your financial institution, you will have to fill out the required paperwork.

You must decide which dividend option fits your current needs. You need to ask your insurer just how much flexibility you have. Can you change it yearly? You will have to tell the insurer if you want to use the dividend to reduce your premium. You can also opt to let the dividend money ride. This dividend accumulation can accrue interest and increase your dividends in the future. If you are in a position where your health or age makes additional coverage too costly, you can request that your dividends be used to increase the death benefit in your policy. If you are struggling to make premiums at all, ask the insurer if you can use the dividend payment to pay your premiums for a period of time. Of course, you can always request a cash payment. It all depends on what you need right now.

Flexible Choices

Hopefully, your policy is flexible enough to allow you to make the dividend option choices you want. Most insurance companies have very simple, consumer friendly procedures to make these changes because they want you to be a satisfied customer. Dividend option changes can bridge you during a difficult financial time, increase your coverage when your options are slim, and increase your investment.

Call your insurance agent or insurance company's Customer Service center today and ask them what your choices are. Don't be afraid to ask all the questions you need to make an informed choice and have them lay out all your options. Be sure you request any appropriate paperwork and ask if there is a window of time between making your request and submitting the requested documents and information. Changing the dividend option with your insurer should be quite simple and if you have an agent, use their knowledge to your advantage and get their educated opinion before making a move.